History

Erebor was first discovered and colonized by the Longbeards some time after Durin I awoke in Mount Gundabad. It was inhabited by a mining colony for hundreds of years, and was connected by the Forest Road; Which was built by the Dwarves to connect all of its mining colonies. It ran from the High Pass through Greenwood the Great (Later called Mirkwood) to the river Running that went all the way up to the Iron Hills, which was east of Erebor.

From Colony to Capital

Erebor continued as a colony for many thousands of years, until the awakening of Durin's Bane in the capital of Khazad-dûm. In T.A.1980, King Durin VI was killed by Durin's bane, and in 1981 after the death of Durin's oldest son and heir King Náin I; the next in line Thráin I with the rest of his people fled Khazad-dùm (Renamed Moria).
Thráin with those who would follow him, went to the colony in Erebor in 1999. Where he made himself King under the Mountain, and relocated the capital of the Longbeards.
Under Thráin's rule the Arkenstone was discovered, and many riches were mined from its depths; After Thráin's death and his son Thorin I had ruled in Erebor for ten years, he abandoned the mountain in 2210 for the Grey Mountains; where his people were now gathering.

Decline and reestablishment

After King Thorin left the mountain was once again a colony, and its status as capital city was transfered to the Ered Mithrin.

It was nearly four hundred years before Durin's folk returned in mass to Erebor. The reason for this being that the Dwarves of the Grey Mountains had been fighting a war against the Dragons, who had plagued the Dwarves for hundreds of years. In the year 2589 King Náin II and middle son Frór were killed by a great Cold-drake at the entrance to their halls, which led to the decision by the two remaining heirs, Thrór and Grór, to leave the mountains with those who wished to follow them. The following year ( 2590) the now king Thrór, led a group back to Erebor, while his borther Grór led another portion to the Iron Hills, and even some stayed behind in the Ered Mithrin.

Thrór eventually made it to Erebor, and declared himself King under the Mountain. Under Thrór's rule Erebor once again became the capital of Durin's folk, the Dwarves of Erebor became the best crafters and mason in Wilderland, trade increased with their kinsman in the Iron Hills and elsewhere, and they also became very rich.

But with this new found prosperity came trouble. it wasn't long before the great dragon Smaug heard of their great wealth, and one day decided to take their treasure for himself. in the year 2770 Smaug descended on the mountain in a ball of fire. He killed King Girion of Dale with many of his knights, and he killed a large amount of the Dwarves living in the mountain. Most of the survivors fled to the Iron Hills, others went with the royal family into exile, and some simply went their own way.

The Lonely Mountain was empty for over two hundred years, save the ever vigilant Smaug who slept in the inner most chamber on a great pile of wealth. But while Durin's folk wandered from the mountain to Dunland to the northern Blue Mountains; they ever longed for the halls of Erebor.

The Quest of Erebor and restoration

It wasn't until Thrór's grandson Thorin II Oakenshield met the Wizard Gandalf that the hopes of retaking Erebor seemed possible. Indeed in the year 2941 with Gandalf's council, king Thorin and a small company of friends and family actually made it to the Lonely Mountain. After the Dragon Smaug had realized that the Dwarves had been helped by the Men of Dale he went to their town of Esgaroth intent on destroying them. Only to be killed by a man named Bard the Bowman.
With the help of a Hobbit named Bilbo Baggins Thorin and company were able to retake the city and the treasure. Therefore allowing Thorin to proclaim himself King under the Mountain. But after refusing to give any of the treasure to the Men of Esgaroth, and the Elves of Mirkwood, the mountain and the Dwarves and Hobbit in it were put under a bloodless siege.
Things nearly came to blows when Thorin's cousin Dáin Ironfoot (Grór's grandson) arrived as aid to his kinsman and nearly went to battle against the besiegers. But Gandalf interceded and warned them all of a great host of Orcs and Wargs coming to take the mountain. So the Elves, Men, and Dwarves made an alliance, and fought a bloody batte against their foes in the valley before the gate of Erebor.

In the end the defenders were victorious against the Orcs and Wargs, but king Thorin was mortally wounded and his nephews were both killed in the battle, and after Thorin's death Dáin was made king of Durin's folk and of the mountain. Finally after so many years of longing the Longbeards finally could return to Erebor.

Under Dáin's rule the Dwarves of Erebor became very rich and prosperous. They rebuilt the town of Dale, their trade greatly increased with their kinsman in the Iron Hills once again and with Men; and Erebor was restored to its original greatness.
But once again trouble began to brew in the east. The Men of Dale were nearing war with the Easterlings, and in the year 3019 an emissary from Sauron came to Erebor and told Dáin that if he were to give up the location of Bilbo (Who had discovered the Ring of Power in his travels) that Sauron would return to him the three remaining Dwarven rings. But being wary of the emissary, Dáin sent his kinsmen Glóin to Rivendell to warn Bilbo that Sauron was after him.

Several months later war broke out between Dale and the East. Dale was driven from their borders at the river Running, and was besieged in their city of Dale for three days in what became the Battle of Dale. Even with the aid of the Dwarves they could not stop the advance of the Easterlings; and on the third day as the Men and Dwarves retreated into the mountain, King Brand and King Dáin were killed at the its very gates. The Dwarves and Men held out for several days until word reached the ears of the Easterlings that the great hosts of Sauron in the south had been defeated in the Battle of the Morannon. With this news fear fell on the besiegers. When the besieged saw this they came forth from the Erebor, and attacked their enemy driving them from Dale across the Running, never to be bothered again.

After the death of his father, Thorin III Stonehelm became king of Durin's folk, and Erebor. Little is known of his reign other than his people helping rebuild the cities of Gondor and the fortress of Helm's Deep, and part of his people moving to the Glittering Caves. Erebor continued to prosper until the world grew old and the races of Durin ended.